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khammond on DSKJM1Z7X2PROD with NOTICES

Federal Register / Vol. 86, No. 159 / Friday, August 20, 2021 / Notices complaint delivery requirement with more timely delivery requirements.
Rule G10, as designed, serves to educate and protect investors and municipal advisory clients by providing them with information about the MSRB
rules designed to protect them and the process for filing a complaint with the appropriate regulatory authority. The rule currently requires dealers and municipal advisors collectively, regulated entities to provide certain notifications to customers and municipal advisory clients, respectively, once every calendar year. More specifically, Rule G10 requires regulated entities to provide, in writing, which may be made electronically, the following information required notifications:
i A statement that the regulated entity is registered with the SEC and the MSRB;
ii The website address for the MSRB;
and iii A statement as to the availability to the customer or municipal advisory client of a brochure that is available on the MSRBs website that describes the protections that may be provided by MSRB rules, and how to file a complaint with an appropriate regulatory authority.6
Given there has been a reasonable implementation period to allow the MSRB time to obtain meaningful insight on the operation of the rule, the MSRB
conducted a retrospective review of the obligations under Rule G10. The MSRB
identified an opportunity to reduce certain compliance burdens by reevaluating the potential benefits of the rule to better align the scope of the rules application. The proposed rule change is specific to the dealer obligations under Rule G10 and the MSRB is not proposing to modify municipal advisors obligations under the rule because the obligation municipal advisors have under Rule G
10 is already limited in scope in that a municipal advisor must provide the required notifications promptly after the establishment of a municipal advisory relationship, as defined in MSRB Rule G42fv, or promptly, after entering into an agreement to undertake a solicitation, as defined in Rule 15Ba1
1n, 17 CFR 240.15Ba11n, under the Act, and then no less than once each calendar year thereafter during the course of that agreement. The obligation 6 See MSRBs Information for Municipal Securities Investors, available at https
www.msrb.org//media/Files/Resources/MSRBInvestor-Brochure.ashx?la=en and Information for Municipal Advisory Clients, available at https
www.msrb.org//media/Files/Resources/MSRB-MAClients-Brochure.ashx?la=.

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dealers currently have under Rule G10
is broader in that each dealer must provide the required notifications to all customers, including SMMPs, even if those customers have not effected any transaction in municipal securities and may never effect a transaction in municipal securities.7 Recognizing that MSRB Rule G48 underscores the differences between dealer obligations to non-SMMP customers and SMMP
customers, the MSRB also assessed whether a modification to Rule G48
was warranted.
Proposed Amendments to Rules G10
and G48: Dealer Obligation To Make Required Notifications I. Customer Receipt of Required Notifications The proposed amendment to Rule G
10a, would require dealers to provide the notifications to those customers for whom a purchase or sale of a municipal security was effected and to each customer who holds a municipal securities position. Narrowing the scope to those customers that engage in municipal securities transactions would reduce the burden of remitting the notifications unnecessarily to all customers, while ensuring that dealers remit the notifications to customers who would most benefit from receiving them. Customers who do not receive the notifications directly pursuant to Rule G10a will still have access to them as section b of Rule G10 would require each dealer to have the required notifications available on its website for the benefit of such customers. As a result, the MSRB does not believe there is a detrimental impact to such customers and believes that not receiving the notifications may avoid confusion for customers who currently receive such notifications even though they have not effected a municipal securities transaction or hold municipal securities.
The proposed rule change would also amend Rule G48 to modify a dealers obligation under Rule G10.
Specifically, the proposed amendment to add section f to Rule G48 would 7 On December 7, 2020, the MSRB issued MSRB
Request for Input on Strategic Goals and Priorities, available at https www.msrb.org//media/Files/
Regulatory-Notices/RFCs/2020-19.ashx??n=1, with a comment period deadline of January 11, 2021.
Two commenters recommended changes to certain dealer obligations under Rule G10. See Letter from Mike Nicholas, Chief Executive Officer, Bond Dealers of America BDA, dated January 11, 2021.
See also Letter from Leslie Norwood, Managing Director and Associate General Counsel and Bernard Canepa, Vice President and Assistant General Counsel, Securities Industry and Financial Markets Association SIFMA, dated January 11, 2021.

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allow a dealer to make the notifications available on its website rather than remit the notifications to an SMMP
pursuant to Rule G10a.8 The MSRB
believes that customers who meet the definition of SMMPs under Rule D15
are sophisticated in their understanding of the municipal market. In the event that an SMMP is seeking the information found in the required notifications, including the MSRBs website address, dealer registration status and how to file a complaint with the appropriate regulatory agency, a sophisticated customer is likely to know the information, or seek access to it from the dealers or MSRBs website. The proposed amendment to Rule G48
balances the burden on dealers to remit the required notifications to SMMPs against the usefulness of SMMPs receiving such notifications when the information is otherwise readily available. This modified obligation dealers have with respect to SMMPs is proposed section f of Rule G48, in keeping with the placement of other modified obligations for transactions with SMMPs under Rule G48.
II. Exception for Dealers Subject to Carrying Agreements The proposed amendments to Rule G
10 would apply to all dealers, with two general exceptions: i A dealer that does not have customers, or ii a dealer that is a party to a carrying agreement in which the carrying dealer has agreed to comply with the requirement to provide notifications under the rule.
The proposed amendment to section c of Rule G10 would provide that any dealer that does not have customers, or who is a party to a carrying agreement in which the carrying dealer has agreed to comply with the required notification requirements, would be exempt from the Rule G10a requirements. The MSRB recognizes that customer accounts may be held at other dealers, subject to a carrying agreement, and that the carrying dealers are responsible for providing account statements and trade confirmations. Therefore, the proposed amendment to Rule G10c is meant to acknowledge common business practices and facilitate carrying dealers compliance with the requirement to provide notifications under the rule, on behalf of other dealers.9 Additionally, 8 In order for a customer to be deemed an SMMP, MSRB Rule D15 requires dealers to determine the nature of the customer, the customers sophistication level, and also requires a customer affirmation, as specified in the rule.
9 The proposed rule change promotes regulatory consistency with section b2 of FINRA Rule 2267, on Investor Education and Protection, which
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